Suspicious transaction reporting by financial institutions falls

Published On: February 28, 2018 08:34 AM NPT By: Republica  | @RepublicaNepal

KATHMANDU, Feb 28: The number of suspicious transaction reporting (STR) by financial and other reporting institutions has declined significantly in the last fiscal year -- FY2016/17. 

According to the data of Financial Information Unit (FIU) at the Nepal Rastra Bank (NRB), the number of STRs that the unit received in the last Fiscal Year 2016/17 fell to 1,053 from 1,589 in the previous Fiscal Year 2015/16. 

The number of STRs in FY2015/16 was higher than the number of STRs that the FIU had received in previous fiscal years.

STRs are detailed information about transactions that are or appear to be suspicious, helping the FIU to identify individuals, groups and organizations involved in fraud, terrorist financing, money laundering and other crimes. 

All  BFIs,  money-changers and remitters, cooperatives, insurance companies, and securities  business persons and  designated non-financial business and professions like dealers  of  precious  stones  and  metals,  casinos,  independent  accountants  and  legal professional,  notary public, trust and company service providers,  designated government agencies such as the Office of the Company Registrar, Land Revenue Offices and Department of Customs, among others, are legally obliged to report suspicious transactions to the FIU.

FIU requires reporting of all actual or attempted transactions, if the reporting entity has reasonable grounds  to  suspect that the  money/asset  is  generated  from  or  related  to  money laundering, terrorist financing, or other  offences  and illegal activities. It may also include the transactions that are large, complex, unusual, legally or economically impossible, or discordant.

According to the report of the FIU, the top reporting sector for FY2016/17 remained banking sector. The criminality  most commonly  reported  in  STRs  during  FY2016/17  was tax  evasion,  followed by misuse of payment  products.

FIU has attributed the decline in the number of STRs to the fact that the reporting entities have learned to scrutinize and submit only genuinely suspicious activities. 

“The numbers of STRs appear to decrease this year. This is mainly due to the submission of quality STRs from the reporting entities,” added the report. 

Out of the total STRs, the FIU has said that it forwarded 391 cases to the investigating agencies. According to the report, it disseminated 174 cases related to tax evasion to the Department of Revenue Investigation, 124 to Nepal Police and Central Investigation Bureau, 39 cases to Department of Money Laundering Investigation, and 37 cases to other regulator and supervisor. Similarly, nine cases have been disseminated to the Commission for the Investigation of Abuse of Authority (CIAA) and eight cases to Inland Revenue Department

According to the FIU, an STR converted into intelligence by adding value is disseminated to respective investigating agencies as per their mandate and nature of the case.

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